You need to review your insurance now to find out if you are protected in the event of an accident. If you wait until you are injured, it will be too late to purchase additional coverage.
Make sure that you have the right insurance coverage protection.
Many people say that they have “full coverage” or ask for “full coverage” from their insurance agent. However, few people understand exactly what “full coverage” means under Kentucky law. Kentucky law only requires certain types of coverage. However, complying with the minimum standards of Kentucky law does not fully protect you if you are injured in an accident. Review your policy to make sure you are fully covered in an accident.
If the accident is not your fault, your own insurance coverage can be a source of valuable benefits. Also, if the accident is caused by someone who has too little or no insurance, your own insurance can cover all or part of your damages.
Many people don’t understand why their insurance should have to pay due to the fault of another, but in the real world, the most important thing is to be covered for unexpected injuries and damages, regardless of the source. You cannot trust that the person who injures you will be looking out for your best interests.
Where Should I Look?
You should have received a “declarations page” from your insurance company. This is a sheet or sheets of paper that tell you the amount of coverage you have, the types of coverage you have, and the amount of premium you paid for the coverage. Find your declarations page(s) and make sure that you have the following types of coverage:
Pip – Basic Reparations Benefits – No Fault
This type of coverage is provided to help you pay for medical bills and lost wages in the event of injury or funeral benefits and survivors’ benefits in the event of death. Depending on the insurance company, it can be labeled as any one of the three headings for this section: PIP, Basis Reparations Benefits, or No Fault Coverage. All three of these refer to the same type of coverage.
The Basic Limit of PIP Coverage is $10,000.00. Kentucky law requires that PIP benefits in the amount of $10,000.00 be included in all insurance policies unless the insured signs away their right to receive PIP benefits. Do not allow your insurance agent to talk you into signing away your right to PIP benefits.
The money you might save on your premium is minor compared to the damage of not having PIP coverage. PIP does not cost much money. Most of the money for a premium is for liability, collision and comprehensive coverage. Do not sign away your right to PIP.
You can also buy additional PIP, called Added Reparations Benefits, on your insurance policy. This will give you more coverage to protect you against medical bills and lost wages, funeral benefits and survivor’s benefits in the event of injury or death. Again, the cost is minimal compared to the coverage you receive.
Uninsured Motorists Coverage – Um
Uninsured motorist coverage is insurance coverage you buy to help pay for damages to you caused by another driver who has no insurance.
EXAMPLE: A is rear-ended by B and breaks his arm. The accident is B’s fault. B does not have any insurance. If A has uninsured (UM) coverage on his policy, he can make a claim against his own insurance for damages related to his injury even though B has no insurance to pay for damages. A is protected from financial hardship because of his own insurance coverage.
Kentucky law requires that UM coverage be included in all insurance policies unless the insured signs away their right to UM Coverage. Do not allow your insurance agent to talk you into signing away your right to UM Coverage. If you do not understand what you are signing in your application, ask your agent to make sure you are not signing away an important coverage. If you sign away your UM coverage, you run the risk that you will have no chance of recovery from a wreck, regardless of how bad you are hurt.
Underinsured Motorists Coverage
Underinsured motorist coverage (UIM) is a separate type of coverage than Uninsured coverage (UM) although they sound and look similar. Underinsured motorist coverage is insurance coverage you buy to help pay for damages to you that are caused by another driver who does not have enough insurance to cover your damages.
EXAMPLE: C is hit head-on by D and hurts his knee. The accident is D’s fault. D only has $25,000 in liability insurance coverage and C’s medical expenses already total $30,000. If C has underinsured (UIM) coverage on his policy, he can make a claim against his own insurance for damages related to his injury which D’s insurance is insufficient to cover. C is better protected from financial hardship because of his own insurance coverage in addition to the liability coverage of D.
Unlike UM coverage, Kentucky law does not require UIM coverage to be put on a policy. Further, your insurance agent is not required to tell you about UIM coverage. A lot of insurance agents will not tell you about UIM coverage because UIM coverage is not a good deal for the insurance company because the premium is cheap compared to the coverage you get for the money. Some agents choose to protect the insurance company rather than their client. However, Kentucky law states that an insurance agent MUST provide you with UIM coverage if you ask for it. Make sure to ask your agent to include UIM coverage on your policy.
In order to be fully protected in the event of an accident, you must have both UM and UIM on your policy or you may recover little in the way of compensation for your injuries.
Collision And Comprehensive Coverage
Most people are familiar with these types of coverage. This is coverage that is purchased to pay for repairs to your vehicle if you are involved in an accident. This coverage pays for your damage regardless of whether or not you are at fault in the accident. It is also one of the more expensive parts of an automobile insurance policy.
NOTE: UM coverage will NOT pay for property damage caused by an uninsured driver. It will only pay for damages related to physical injury or death. To protect yourself against an uninsured driver for property damage, you MUST buy collision coverage.
Very few people are aware that GAP Insurance exists but it can be a very important coverage to have. In the event of a wreck which destroys your vehicle, Kentucky law only requires the insurance company to pay for the fair market value of the vehicle. If the cost of repairs is more than the fair market value of the vehicle, the insurance company will “total” the vehicle and pay you for the fair market value. This is true even if the lien on the car is MORE than the fair market value. You will be responsible for the difference between the amount of the lien and the fair market value of the vehicle unless you purchase GAP insurance.
EXAMPLE: E leases a car from Car Dealer. Six months later, E is hit by F in a car accident. F is at fault for the accident. The insurance company totals the vehicle and pays the fair market value of the car to the Car Dealer. After payment, there is still an extra $2,000 owed to the Car Dealer under its contract with E. E will have to pay the $2,000 out of his own pocket.
EXAMPLE: G buys a car from Car Dealer and finances it with Bank. G gets hit by H on the highway. H is at fault for the accident. The fair market value of the car is $12,000. However, G still owes $15,000 to the Bank for the car. The insurance company will pay the $12,000 fair market value and G will have to pay the extra $3,000 that he is “upside down”.
GAP insurance protects you from being “upside down”. GAP insurance steps in and pays the difference between the lien and the fair market value if a car is totaled so that you are not responsible for any out of pocket property damage in the event of an accident. Like collision and comprehensive coverage, GAP insurance will pay regardless of fault.
GAP insurance is ALWAYS necessary when you lease a car. Most of the time, GAP insurance is necessary when you buy a new car. Ask your agent about GAP insurance.
Like UM and UIM coverage, GAP insurance is surprisingly affordable. It is a small price to pay to make sure you are completely protected from an unexpected financial drain, especially in times when every dollar is needed to cope with the injuries sustained in an accident.
Liability – Bodily Injury Coverage
This is coverage that protects you if you are at fault for an accident. It is also one of the more expensive parts of the premium. Because of this, many people buy the lowest coverage possible. Kentucky law only requires motorists to have liability insurance in the amount of $25,000 per person and no more than $50,000 coverage per wreck.
Given the high cost of medical expenses nowadays, it does not take long for even a minor injury to accumulate medical bills in excess of the policy limits. It is one of the reasons that UM and UIM is so important to purchase on your own policy. You must decide how much coverage you want to protect you in the event of an accident with an uninsured or underinsured driver at fault.
It is in your best interests to buy as much UM and UIM coverage as you can. However, insurance companies require that the liability limits of a policy also be raised if you want to buy higher limits on UM and UIM. You cannot buy more UM and UIM than the liability coverage that you have. In order to protect yourself, you must also protect other drivers from an accident that may be your fault. However, raising the liability limits also protects you from a suit to collect against your assets if your insurance coverage is not enough to pay for the damages caused by your actions.
Another thing to watch out for are insurance agents who will sell you higher limits on liability but only place the minimum (25/50) limits on your UM and UIM coverage. There is no other reason for your agent to do this except to protect the insurance company. The added premium is extremely small for the protection it gives you in the event of a wreck due to somebody else’s negligence. Make sure that your UM and UIM coverage is the same as your liability limits.
The law firm of Gary C. Johnson, P.S.C. is committed to educating people about their coverage and advising them regarding the level of protection they have on their insurance policy. The attorneys and staff will meet with you to discuss your policy and review the coverage you have and explain what each coverage means to make sure you have the level of protection you want. This consultation is free to the public. Contact any one of our three offices to take advantage of this free consultation.